2003 (3) TMI 620 - AT - Central Excise

Summary

Issues:
- Allowance of credit on P.B. Warm Wheel
- Allowance of credit on Flow Switch
- Allowance of credit on Refrigeration Compressor

P.B. Warm Wheel: The Revenue argued that the credit should not be allowed on the P.B. Warm Wheel as it is used in the effluent treatment plant, which is a separate process from manufacturing. The argument was that credit should only be allowed on goods used for manufacturing final products. However, the respondent contended that the P.B. Warm Wheel is essential for pollution control and plant functioning. The Commissioner (Appeals) supported this view, emphasizing its necessity in current circumstances. The Tribunal did not provide a final decision on this issue, as the case was remanded for further consideration.

Flow Switch: The Revenue opposed allowing credit on the Flow Switch, stating that it does not contribute to changing any substance for manufacturing the final product. On the other hand, the respondent argued that the Flow Switch is essential for regulating compressor functions and can be considered a capital good under Rule 57Q. The Commissioner (Appeals) supported this argument, providing reasonable reasoning. However, the Tribunal did not provide a final decision on this issue, as the case was remanded for further consideration.

Refrigeration Compressor: The Revenue contended that credit should not be allowed on the Refrigeration Compressor as it does not have a direct nexus with manufacturing the final product. The respondent cited a notification bringing the Refrigeration Compressor under the definition of capital goods and referred to relevant case law to support their argument for allowing credit. The Commissioner (Appeals) allowed credit on the Refrigeration Compressor, and the Tribunal found that the Commissioner (Appeals) did not discuss the amendment in Rule 57Q effectively. The Tribunal remanded the case for reconsideration in light of the Supreme Court decision and the amendment, emphasizing that the nexus is not necessary for allowing credit. The appeal was allowed by way of remand for further detailed consideration.